Why More Accountability Is Needed In Federal Funding Of Short-Term Certificate Programs

A new analysis by Third Way reveals that many short-term certificate programs that received millions of dollars in federal CARES funding have poor track records of increasing the earnings of their students, particularly those who come from low-income backgrounds.

As part of the CARES Act, Congress allocated more than $14 billion in emergency funding to help students and higher education institutions cope with the economic fallout from the coronavirus pandemic. Of this total, $1.6 billion went to certificate-granting institutions, which traditionally serve high proportions of low-income students, as well as older students returning to school. In other words, they aim at individuals who need training and a credential to improve their job standing and economic outlook.

Certificate programs are short-term (less than one or two years in length) non-degree curricula that usually focus on the technical skills necessary for a given occupation like coders or assistants and technicians in various healthcare fields. They are increasingly championed as good pathways for improving individuals’ economic prospects, especially during the current time when millions of Americans have lost their jobs in the wake of the pandemic.

Third Way used College Scorecard data to examine the average economic benefit that students realized after completing short-term certificate programs, typically lasting in the range of 6-18 months. It analyzed students’ post-enrollment earnings for 230 schools, and it divided students attending those schools into two groups: those who came from families making $30,000 or less per year, and those who reported family incomes of $75,000 or more annually.

It then classified the post-enrollment earnings of students attending these programs by looking at the percentage who earned more than a typical high school graduate (>$28,000) six years after enrollment. 

The data show that low-income students who attended certificate-granting institutions were much less likely to earn adequate salaries compared to their wealthier peers. 

• More than 70% of certificate-granting institutions leave their students who come from low-income backgrounds earning less than the typical high school graduate ($28,000).
• At only nine out of 230 institutions (4%) did the average low-income student earn more than $35,000 six years after initial enrollment.
• The story is much different for students who come from higher-income backgrounds. Higher-income students were earning more than $35,000 annually after six years of initial enrollment at almost half of these institutions (48%). In other words, relatively well-off students, which make up only about 20% of those enrolled at these schools, were much more likely to achieve this better income threshold than low-income peers attending the same school. 
• The disparities in post-enrollment earnings also increase over time. After only six years, 63% of institutions show an earnings differential of $10,000 or less between low- and higher-income background students. But four years later, these numbers are reversed. Ten years after enrollment, 53% of institutions show a disparity of $10,000 or more between the two groups of students. And during this same timeframe, 30 institutions show an earnings differential of $15,000 or more between students from low-income backgrounds compared to those from higher-income families.
• Overall, 70% of the certificate-granting institutions receiving CARES funds and included in this analysis have failed to prepare most low-income students to earn above the typical high school graduate, even 10 years after they enrolled. Despite this disappointing record, these institutions received more than $3 million each on average from CARES. 

These results point to at least one obvious question for additional study: why did the future earnings of low-income-background students differ from those of higher-income students, given they were enrolled in the same programs? Several possible factors may explain that disparity, but I think the most likely is that a greater percentage of the higher-income students actually finished the programs and earned the certificates, which in turn translated into better job outcomes.

Short-term certificate programs can advance economic mobility for students, and they can do so with far less expense, and in much less time than traditional associate and bachelor-level programs. They are an extremely valuable postsecondary option. Nonetheless, the Third Way analysis shows how important it is to focus future subsidies on programs with demonstrated quality and proven track records of successful employment by their former students.

Third Way concludes, with this warning: “As Congress considers future measures to support today’s students, taxpayer dollars must be focused on institutions shown to serve our most vulnerable students well. Many institutions deliver on this promise, but some do not. If institutions have historically failed to prepare low-income students to earn a decent living, it’s unlikely that their outcomes will suddenly improve during a time of rapid transition. Unfortunately, providing them with additional federal funds without clear requirements that they produce good outcomes for students could just exacerbate the employment and economic disparities that already exist.”